What is a Systematic Investment Plan?
Systematic Investment Plan

A Systematic Investment Plan (SIP) is a facility offered by mutual funds to investors enabling them to invest a fixed amount in a mutual fund at regular intervals. The frequency of investment could be weekly, fortnightly, monthly or quarterly.

Benefits of SIP

Easy on the wallet

You no longer need to wait till you have accumulated a huge lumpsum in order to start working towards your goals. Even if all you can save up monthly is just Rs. 500, you can still start an SIP and start saving up for your goals.


Averages out cost of investment

By investing through the year, an investor lands up purchasing units at different prices. This helps average out the cost of an investment and works out better than trying to time the market or investing a lumpsum amount at a time.


No need to time the market

In an ideal scenario an investor would be able to purchase stocks at a low price and sell high. But trying to time the market in this manner is not only time consuming it can also be futile as you many never land up investing at all. By investing regularly with an SIP you will land up buying units at various prices and ultimately average out the cost of your investment.


Benefit from power of compounding

An SIP is useful whether your investment horizon is short-term or long-term. A long-term investment horizon helps you benefit from the power of compounding. Hence it is important to start investing early.


Brings discipline to investing

In order to reach your goals, you need a well-planned investment strategy as well as discipline. The best part about an SIP is that it lets you attend to your other commitments while ensuring that you still stay on track towards reaching your financial goals.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.